3 Types of GST in the Real Estate Sector

GST in real estate sector

The real estate sector in India has undergone significant changes with the implementation of Goods and Services Tax (GST). Whether you are a homebuyer, an investor, or a developer, understanding the different types of GST applicable in the real estate industry is essential. In this blog, we will explore the three main types of GST in the real estate sector and how they affect flats for sale in Bhubaneswar, as well as the overall Bhubaneswar property market trends 2025.

1) GST on Under-Construction Properties –

Before the introduction of GST, multiple indirect taxes such as VAT, service tax, and entry tax were levied on real estate transactions. Now, GST is applicable on under-construction properties at a rate of:

  • 1% for affordable housing (properties costing up to INR 45 lakh)
  • 5% for non-affordable housing (properties exceeding INR 45 lakh)

This tax applies to buyers purchasing properties before the completion certificate is issued.

2) GST on Completed Projects –

A key relief for homebuyers is that GST is not applicable on completed residential projects with an occupancy certificate. This means:

  • Affordable housing in completed projects is completely GST-exempt.
  • Non-affordable housing in completed projects is also GST-exempt.

Buyers looking for ready-to-move-in homes can benefit from this, as they do not have to bear any additional tax burden. This makes completed properties a more attractive option for those seeking flats for sale in Bhubaneswar.

Motwaniimg 2a

Affordable vs. Non-Affordable Housing Categories

Affordable housing is defined based on property value and carpet area:

  • Metros: Homes up to 60 sq. meters (approx. 645 sq. ft.) with a value up to INR 45 lakh qualify as affordable.
  • Non-Metros: Homes up to 90 sq. meters (approx. 968 sq. ft.) with a value up to INR 45 lakh qualify as affordable.

Anything above these limits falls under the non-affordable housing category, which attracts the higher 5% GST rate.

For instance, if you are exploring flats for sale in Bhubaneswar, purchasing an under-construction unit may involve paying GST, but completed projects from a reputed builder like Motwani Constructions will not attract any GST charges.

Motwaniimg 2b
Motwaniimg 2c

3) GST on Commercial Real Estate Transactions –

The GST on commercial properties is different from residential properties. If you are buying or leasing a commercial unit, the applicable GST is:

  • 12% for commercial properties (if under construction)
  • 18% for leasing commercial spaces (if the landlord is registered under GST)

This means businesses renting office spaces or retail outlets in Bhubaneswar need to factor in the GST component. With Bhubaneswar property market trends 2025 indicating a rise in commercial developments, investors and businesses must stay informed about GST implications before making any purchase.

GST on Input Tax Credit (ITC) for Developers –

Developers and builders benefit from the Input Tax Credit (ITC) under GST, which allows them to claim tax credits on construction materials like cement, steel, and other raw materials. However, with the new tax regime, ITC benefits are no longer passed on to homebuyers, as the government has introduced a simplified tax rate system.

This move has impacted developers like Motwani Constructions, as they must carefully manage construction costs while keeping property prices competitive. Buyers should keep an eye on Bhubaneswar property market trends 2025 to understand how these tax changes affect real estate pricing.

Impact of GST on Homebuyers and Developers –

The introduction of GST has brought transparency and streamlined taxation in the real estate sector. However, it has also increased the financial burden on homebuyers purchasing under-construction properties. Here’s how GST affects key stakeholders:

  • Homebuyers: Higher tax on under-construction properties makes completed projects more attractive. Those searching for flats for sale in Bhubaneswar should evaluate the tax implications before making a decision.
  • Developers: With ITC restrictions, developers must manage their pricing strategies wisely to maintain profitability.
  • Investors: GST on commercial real estate has made leasing more structured, leading to stable rental yields.

GST has significantly influenced the Indian real estate market, including the Bhubaneswar property market trends 2025. Whether you are considering an investment in flats for sale in Bhubaneswar or exploring commercial opportunities, understanding GST implications is crucial. 

Reputed builders like Motwani Constructions continue to adapt to these tax changes, ensuring buyers get the best deals with transparency in transactions. By staying informed, homebuyers and investors can make well-informed decisions in the evolving real estate landscape.

FAQs on GST in the Real Estate Sector

1. What is the GST rate on under-construction flats for sale in Bhubaneswar?

Under the current GST regime:

    • 1% GST is applicable for affordable housing (properties costing up to INR 45 lakh).

    • 5% GST is applicable for non-affordable housing (properties exceeding INR 45 lakh).
       This tax is applicable only on under-construction properties and does not apply once a completion certificate is issued.

2. Is GST applicable on completed flats for sale in Bhubaneswar?

No, GST is not applicable on completed residential projects with an occupancy certificate. Buyers investing in ready-to-move-in homes in Bhubaneswar, such as those by Motwani Constructions, do not have to pay any GST.

3. What is the difference between affordable and non-affordable housing under GST?

Affordable housing:

    • Metros: Up to 60 sq. meters (approx. 645 sq. ft.) with a value up to INR 45 lakh.

    • Non-Metros (like Bhubaneswar): Up to 90 sq. meters (approx. 968 sq. ft.) with a value up to INR 45 lakh.

Properties exceeding these limits fall under non-affordable housing, which attracts a higher GST rate of 5%.

4. What is the GST rate on commercial real estate in Bhubaneswar?

    • 12% GST is applicable on under-construction commercial properties.

    • 18% GST is levied on leasing/renting commercial spaces if the landlord is registered under GST.
       With Bhubaneswar property market trends 2025 indicating growth in commercial spaces, investors must consider these tax implications before making a decision.

5. How does GST impact developers like Motwani Constructions?

    • Developers cannot claim Input Tax Credit (ITC) on construction materials like cement and steel under the new tax regime.

    • This affects pricing strategies, but reputed developers like Motwani Constructions continue to offer competitive prices while maintaining transparency.

6. Is GST applicable on resale flats for sale in Bhubaneswar?

No, GST is not applicable on the resale of residential properties, as it is only levied on under-construction properties.

7. How does GST impact Bhubaneswar property market trends in 2025?

With the streamlined taxation system, GST has:

    • Made completed projects more attractive due to tax exemptions.

    • Affected under-construction property prices due to higher tax rates.

    • Increased investment in commercial spaces, as businesses seek structured leasing options with predictable GST costs.

8. What should homebuyers in Bhubaneswar consider regarding GST before purchasing a property?

Homebuyers should:

    • Prefer completed projects to avoid paying GST.

    • Evaluate whether an under-construction flat for sale in Bhubaneswar falls under affordable or non-affordable housing.

    • Consult a trusted builder like Motwani Constructions to understand the GST implications before making a purchase.

Check Our Latest Video on Instagram

motwaniconstr156 e1739608922618 1